Differentiating Between
Noble Failure and Stupid Failure
The Jazz of Innovation
Charles Schwab pioneered seamless stock trading on Internet in 1996 and
grew from a small firm to the World's leader.
David Pottruck, a legendary
leader of Charles
Schwab, says: "The idea that failure is okay is ridiculous. I am not going
to go around the company and reward someone for failing. But here at Schwab
we differentiate between noble failure and stupid failure."1
Charles Schwab has a set of
criteria for defining noble failure.
Noble failure occurs when:
-
you have a good plan and know
what you're doing, you've thought everything through carefully, and have
implemented with sufficient management discipline, that if you look back
in review, you'd conclude it was thoughtfully done
-
you have a reasonable
contingency plan to deal with any initial failure and the contingency
plan must have been implemented
-
you need to debrief yourself and
ask what you can learn from the experience that will lead your company
to be smarter next time.
Charles Schwab journals their
failures and lessons they've learned. They maintain also a display of failed
innovations and created a videotape for employee orientation. "When
celebration of noble failure becomes institutionalized, people within
the organization are more willing to
reassess earlier decisions1" and take corrective measures.
Inspiring
Culture: 5 Elements
